UPFRONT
EDITORIAL
K_\ e\n Ôo\[ income reality
W
hen it comes to fixed income in 2016, investors cannot really say with any degree of certainty where the winds of change may be taking us. Government bond yields are at record lows, and corporate debt is now moving in the same direction. In the not-too-distant past, the idea of a negative-yielding bond would have been considered illogical, but that’s the reality in 2016. Yet fixed income continues to attract large amounts of investment, an apparent paradox that has many in the wealth management business re-evaluating their investment philosophies. As a result, Bloomberg’s Canadian Fixed Income Conference, held in September, was not short of talking points. One issue highlighted was increasing regulations right across the board – something that’s a concern throughout the advisory world. Martin Bellefeuille, managing director and head of fixedincome trading at Desjardins Securities, believes many in the industry are still
In the not-too-distant past, the idea of a negative-yielding bond would have been considered illogical, but that’s the reality in 2016
wealthprofessional.ca ISSUE 4.08 EDITORIAL
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in the dark regarding the specifics of the new regulations. “We’re bombarded with all these rules changes, and we need to evolve and adapt,” he said. “There are some questions that, I’ll say candidly, we don’t have answers to. And as a dealer, we have to know what the costs of these changes are.” Also discussed at the conference was the need for Canada’s economy to diversify and move away from its energy dependence. On that issue, National Bank of Canada CEO Louis Vachon called on the nation’s businesses to step up to the plate. “We are a well diversified economy, and it’s high time for other sectors, like services and manufacturing, to come back and play a bigger role in economic development.” While Canada’s economy continues to splutter along, the TSX is having a great year, increasing 12% since January’s lows. Stocks, therefore, are currently on the expensive side, which means many investors are pursuing other avenues. Speaking at the Bloomberg conference, Bruce Anderson, Manulife Financial’s managing director of project finance and infrastructure, described how the federal government’s infrastructure spending plan was having the effect of pushing forward other private projects. Considering that infrastructure finance is worth more than $1 billion annually in Canada, it’s certainly another option in what is currently a challenging investment environment. The team at Wealth Professional
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